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Forget the Box

Kitchen Light

We’ve all heard the phrase “think outside of the box,” the implication being that what’s normal and usual is “the box,” and good ideas live somewhere else. By extension, to come up with high-quality, innovative ideas you need to think outside the box. But who says the best idea isn’t actually in the box? Or that there even is a box? Or maybe the box isn’t the issue; it’s just that the current box is in the wrong place?

The metaphor itself points to the problem within the problem: How we think about and talk about the decisions we need to make is highly predictive of the ideas and solutions we’re going to come up with. Or to put it another way, if we think in terms of boxes, we’re going to come up with cubic solutions.

Innovation is a fun topic on which to opine. The best part about it is that almost anyone is qualified to add to the discussion because we all have it in us. The desire to innovate, explore, create, adapt, change, and make something our own is as old as thinking. It’s in our genetic make up.

That doesn’t mean that we’re all experts at innovative thinking. Not everyone is as practiced as they might be. Indeed, many of us have spent major portions of our lives honing skills and traits that place a premium on process, predictability, stability, repeatability, and all the other “ilities” that seem antithetical to innovation.

At least as significantly, most of us work in organizations that, despite the rhetoric, are mostly uninterested in innovation. The understandable desire for predictable financial returns, the need for a rational resource allocation process, and the imperative to satisfy known demands from known customers all lead us towards known solutions and incremental thinking. Innovation, when it does show up, often flickers and then dies a premature death because the mechanisms that support organizational health are the very antibodies that tend to choke off orthogonal thinking, wild hairs, crazy ideas, whacky notions, kooky applications of existing technologies, or whatever innovation feels like in your organization.

It doesn’t have to be like that.

Forget the Box is a discussion of how to foster innovative thinking in your organization. Not innovation for the sake of coming up with “off the wall” or “out of the box” ideas, but innovative, actionable thought that leads to high quality decisions and outcomes. In this paper, we’ll look at the following ideas:

  • A definition of innovation.

  • Why organizations don’t act innovatively.

  • How leaders can kill innovation.

  • Why people don’t act innovatively.

  • What leaders can do to support innovation.

 

What is Innovation?

There’s probably a really good definition of innovation out there somewhere, but the dictionaries I checked don’t seem to know about it. The definitions I did find generally sounded something like this:

in•no•va•tion  n. 1) The act of introducing something new. 2) Something newly introduced.

A thesaurus is more illuminating. My search turned up words like these: addition, alteration, contraption, cutting edge, departure, deviation, in thing, introduction, last word, latest thing, latest wrinkle, leading edge, modernism, modernization, modification, mutation, new wrinkle, newfangled idea, newness, notion, novelty, permutation, shift, variation, new wrinkle (Roget's Interactive Thesaurus, First Edition)

Still, none of this seems especially helpful to someone looking to experience a little more innovation in their daily diet of thoughts and decisions.

In more ancient times, innovation seemed to divide rather neatly into two divergent types of activity: discovery and creation.

Historically, discoverers are the people who go looking. Their names ring across the ages in stories, myths, and history books. While in the act of discovering, these explorers have mastered, or at least attempted to master, the winds, the oceans, and the weather in an effort to find, uncover, and map the world. They are innovators in the sense that they bring to our attention phenomena that previously lay hidden. Indeed, much of what we call innovation today is really just some form or discovery: discovery of what already is, or perhaps discovery of a new way of using what has already been done.

Creators, while sharing that same desire to explore, use this energy in a different way. As Daniel Boorstin says in his wonderful book Cleopatra’s Nose, Essays on the Unexpected, “Discovery is what men everywhere have found on our same earth. But creation is what men have added to the world.” (pg. 24)

Historically, discovery has been a collaborative effort. Technology, finance, political support, and a massing of human resources all had to come together before Magellan or Columbus or whomever could mount an expedition to go find whatever there was to be found. In contrast, creation has more often been a solo activity: The artist in his loft or the mad professor toiling away in his workshop or backroom.

That historical separation of discovery and creation has in recent centuries and decades merged so that we now often think of them as one. As Boorstin says,

An unsung revolution, more basic even that the historians’ Industrial Revolution, has united these two worlds [discoverer and inventor]. In modern times, as never before, adventurer and artisan have been assimilated into a single community of questing mankind. Western progress since the eighteenth century has dramatically mixed and unified their roles. (pg. 34)

This coming together of discovery and creation into a unified mode of thinking and acting—questing and realizing, experimenting and manifesting—is the essence of modern innovation.

 

Sustaining vs. Disruptive Innovation

In terms of sheer volume, very little of what we call innovation is truly new in the sense that it could be described as a discontinuous leap from what was, to what now can be. What’s far more typical is innovation that comes from discovering how to apply something done elsewhere to some new sphere, or equally as typically, standing on the shoulders of some predecessor to push the state of things along just a bit more.

Not that small innovations are bad. Far from it. But the distinction is useful if for no other reason than to help us calibrate ourselves when we start looking for some OUT OF THE BOX thinking, or whatever we like to call innovation. Most of the innovation we do is the baby step kind. Nurturing and harvesting value from those new ideas puts us miles ahead of all the other organizations and people who can’t even do that.

Having said that, the world we live in provides constant, if often unnoticed proof of the presence and potentially profound impact of discontinuous leaps. Clayton M. Christensen is a professor of business administration at the Harvard Business School. His landmark book, The Innovator's Dilemma, speaks to different types of innovation when he draws a distinction between what he calls sustaining and disruptive technologies.

Most new technologies foster improved product performance. I call these sustaining technologies. . . What sustaining technologies have in common is that they improve performance of established products, along the dimensions of performance that mainstream customers in major markets have historically valued.

Occasionally, however, disruptive technologies emerge: technologies that result in worse product performance, at least in the near-term. . . Disruptive technologies bring to a market a very different value proposition than had been available previously. (pg. xv)

That last definition is certainly arresting. It doesn’t make sense until you think about the fact that “worse” is in relationship to a set of attributes that some existing user currently values. In Christensen’s example, the performance of the then brand new 5.25 inch disk drive was pitiful in comparison to the then dominant 8 inch drive so beloved by minicomputer makers. It was slower, held less, and presumably wasn’t up to the duty cycles. So who would want slower and smaller?

As it turns out nobody did. But someone wanted what the other guys missed: The new drives were tiny in comparison and consumed far less power. Seemed just about perfect for what the nascent desktop computer industry was looking for. With enough development and time on the learning curve, the 5.25 inch drive came to outperform the 8 inch drive on all measures, at which point the bigger drive and the companies that made them were cooked. Long live the 5.25 drive until the next generation drive came along and the cycle began again.

As Christensen points out, “Ironically, in each of the instances studied in this book, it was disruptive technology that precipitated the leading firms’ failure.” (pg. xv)

That’s a bracing thought. In the throws of the dot.com excitement, statements like that appeared nearly daily in the popular, business, and technology press. Established companies with lots of employees, facilities, and equipment were apparently just an innovation away from extinction, waiting to be swatted aside by some venture capital fueled new economy chimera. Mostly it didn’t turn out that way, but that doesn’t mean it won’t.

As is true of so many enthusiasms—Greenspan called it “irrational exuberance”—I would argue that the innovation pendulum swung too far in one direction and now is overcorrecting in the other. While much of the innovation of the late 1990s turned out to be more fluff than substance, to think that you can turn off the innovation tap and still have a sustainable business seems a dangerous if not reckless conclusion.

Sustaining or disrupting, your future will one way or another be defined by innovation. It’s only a question of whether it will be yours or someone else’s.

 

Can Well Run Organizations Innovate?

Unfortunately, the massive reversal in the capital markets, the pallor that the accounting scandals have cast over American business (let’s all keep in mind that the behavior in question goes on in spades elsewhere in the world; it just doesn’t get the visibility it did in the U.S.), and a pervasive gloominess and aversion to risk (thank you banks, thank you Sarbanes- Oxley Act of 2002), has clearly had a dampening effect on innovation in many organizations. This isn’t to say that companies aren’t still doing basic and applied research, because they are. But the kind of wide-open, “let’s take a risk and see what happens” ethos that allows innovation to grow to something applicable has lately been set on low. The result is that innovators and innovations have a geometrically harder time getting noticed and funded.

Usually the issue isn’t a lack of innovative ideas (in a company), it’s the ability to make the necessary decisions to focus on innovation when it appears, allocate resources, and ultimately act.

At an organizational level, innovation and resources (funding and people) go hand in hand. All of the fantasy imagery aside, without resources, innovation never gets very far. As Christensen points out:

. . . most proposals to innovate are generated from deep within the organization not from the top. As these ideas bubble up from the bottom, the organization’s middle managers play a critical but invisible role in screening these projects. These managers can’t package and throw their weight behind every idea that passes by; they need to decide which are the best, which are most likely to succeed, and which are most likely to be approved, given the corporate financial, competitive, and strategic climate.

In most organizations, managers’ careers receive a big boost when they play a key sponsorship role in very successful projects—and their careers can be permanently derailed if they have the bad judgment or misfortune to back projects that fail. . . [P]rojects that fail because the market wasn’t there have . . . serious implications for managers’ careers. . . Hence, middle managers—acting in both their own and the company’s interest—tend to back those projects for which market demand seems most assured. (pg. 82)

In other words, the rational decision-making and resource-allocation mechanisms that all well run companies rely on are the antibodies that are almost guaranteed to kill innovation, or to at least make sure that what gets brought forward goes only toes deep into uncharted waters.

If you are 100% focused on addressing known customer needs, meeting and beating your known competitors, seeking high profits, going to market with proven offers, suppliers, and partners, and delivering superior shareholder returns, nobody will ever fault you. You’ll be able to write terrific annual report copy and your shareholders and analysts will applaud your prudence. And your business may even survive or thrive for quarters to come.

But understand that you’ve institutionalized out innovation.

 

Language Can Kill Innovation

It’s not just our resource allocation processes that put a strain on innovation. Many organizations recognize that innovation needs a place to flourish, and one of the usual solutions is to put a group of people together to brainstorm or engage in some process designed to identify and tease out something good, interesting, even newfangled. That can be a good thing to the extent that it is a regular part of the culture and everyone knows how to play the game innovatively. It can be a wretched and demoralizing process unless it’s staged and framed with care.

Consider the following. It is a slightly edited version of opening remarks made by a senior executive to a group of people assembled for the purpose of doing some “innovating.”

We have a very successful business here that we don’t want to jeopardize. With that said, we’re not growing as much as we’d like. The majority of our sales continue to come from the same group of people. Our efficiencies have declined in recent years. We’re not bringing in new customers at the rate we should. Still, we made good money last year.

So without messing up what we have, we need to really think ‘outside of the box’ and come up with new and innovative ideas for growing our top line without increasing our costs.

“That’s the reality of business” you might say, and you wouldn’t be wrong. It’s scary to think about making changes to something that seems to be working by one measure—in this case generating gross revenues—even if by other measures it’s no longer working (declining profits, eroding market share, increasing employee turnover, etc.). And even if you’re willing to open up the hood on an existing business, how much tinkering should you do before you go for a complete overhaul?

All fair points, but you have to ask yourself, “Will this decision frame lead to the kind of innovative solutions the presenting problem seems to require?” Not likely.

Maybe you had to be there to catch the feeling that opening statement created. Reading between the lines, which is what everyone in the room was doing, here was the real message.

 “We have a very successful business here that we don’t want to jeopardize.” Code for: I’m not prepared to take any risks. If we try something and it ‘fails,’ someone will be unemployed and I don’t intend it to be me.

“But we’re not growing as much as we’d like.” Code for: We wouldn’t be having this meeting except for the fact that I’m under tremendous pressure to do something.

“The majority of our sales continue to come from the same group of people. Our efficiencies have declined in recent years. We’re not bringing in new customers at the rate we should.” Code for: We’ve been ignoring these issues for years. To the extent we have thought about them, we’ve consistently ruled out any solution that contained any risk.

“Still, we made good money last year.” Code for: I’m pretty convinced we’ll make money this year assuming we don’t make big mistakes. And I’m not interested in making any mistakes.

“So without messing up what we have, we need to really think ‘outside of the box’ and come up with new and innovative ideas for growing our top line without increasing our costs.” Code for: Not that I think this is possible, and I’d probably say ‘no’ to anything we come up with anyway, but we need to come up with a magic pill that costs nothing and fixes everything with no risk. Lacking that, I might consider shifting some dollars around if it doesn’t look too threatening. But you can forget about edgy strategies that require any sort of meaningful investment.

Sound harsh? If only it were. The reality is that this particular frame killed the meeting, just like similar frames had killed similar meetings and initiatives. Language matters. How we talk about decisions, problems, and opportunities has a dramatic affect on the level of innovation we can expect coming out the other end.

 

Thinking Traps

Even without all the overhead of navigating an organization’s resource allocation and planning processes, even without innovation killing behaviors and language, we as individuals still have the capacity to trap ourselves into making boring, predictable, non-innovative, and even dumb decisions. Here are some of the most common ways we do that.

Jumping In. Plunging in without explicitly considering what problem you’re really trying to solve, or what opportunity you’re really trying to take advantage of, is probably the most common decision trap. It’s an example of stimulus/response . . . something happens and you go into decision mode without stopping to think about what the real issues are. This most often occurs when we’re presented either with a high pain problem or what appears to be a very attractive alternative, either of which tends to galvanize us into action without much thought to alternatives that might ultimately be more attractive.

What makes it possible for you to start deciding before you’ve worked the problem is that your point of view, problem definition, understanding of the probabilities and possibilities, and knowledge of the overall context are all just fine. Confidence is an admirable quality and in some decision situations it’s necessary and desirable that you operate with those assumptions and jump in. But even in those cases, recognize the risks you’re running.

  • Your scope may be too broad or too narrow.

  • You may be defining the issue in exactly the same way that you did in the past, virtually guaranteeing the same alternatives and choices.

  • You may be missing key stakeholders; or including interests that aren’t necessary or desirable.

  • You may fail to include critical uncertainties, costs, relationships, etc.

Lazy Framing. Defining the problem, opportunity, or decision isn’t necessarily easy, particularly if you prize “quick thinking” or don’t have a high tolerance for debate or “wordsmithing.” The words you use are wildly important, so it’s understandable that the process of defining the decision may get cut short once something that seems comfortable or nearly right shows up.

If you accept the idea that it’s okay, even desirable, to reframe as you work your decision, you may be further tempted towards lazy framing under the assumption that it will all work out in the end. But why do you want to work that hard? The time you save by not working your frame will be consumed many times over by the time lost working in unproductive directions, or in sub-optimal outcomes once you make a choice based on a lazy frame.

Sunk Costs. One of the most insidious examples of lazy framing comes from an inability to put sunk costs into proper perspective. The term “sunk costs” refers to the time, money, and resources you’ve already spent on something, for example:

  • Sticking with a technology implementation simply because you’ve worked on it for the last three years.

  • Continuing to fly a particular airline because of all those miles you have accumulated in your frequent flyer account.

  • Continuing to own a stock that’s gone down in value because you own it for more and you’re waiting for the value to go up.

  • Sticking with a strategy or a policy because that’s the way it’s always been done.

Loyalty isn’t a bad thing. Neither is doing what you can to maximize your return on investment. But none of that excludes the possibility that there are better outcomes available to you in the future if you were to reallocate those same resources to something else. In good times or bad, walking away from an “investment” isn’t easy. And you surely won’t do that if you allow your sunk costs to color your thinking.

Frame Stickiness. It takes discipline and sometimes bullheadedness to keep changing frames, especially after you’ve done the hard work of coming up with a good one in the first place. But sometimes that’s what it takes.

It’s human nature to see our situations through one frame at a time. It’s called our point of view. And once we lock into a frame, we tend not to want to leave. The truth is most problems should be examined through more than one frame. We may wind up back where we started, but with much more confidence that the operating frame is really the one that fits the best.

 

Organizational Innovation

If you thought about it for a few minutes, you could probably come up with a list of really innovative organizations. Apple Computer might be one that comes to mind. Porsche Design might be another—while the cars are models of relentless sustaining innovation, the design company is rightly regarded as innovative. The makers of Smart watches might be on. Pixar Entertainment, another Steve Jobs company, is another. There are many others.

Lots has been written about those companies—and they sure are fun to read about—but a lot of the learnings are pretty useless to an established company. Innovation hot houses are organizations with deep groves and a rich gene pool of innovation. It seeps from the wall sockets and permeates the paint. Yes these companies have methods and practices to facilitate the process of converting innovative energy into actionable thought. But understand they’re starting with a culture that reveres something that most other companies are trying to retrofit in, sort of, as long as it doesn’t mess up the carpets or break any of the stemware.

If you’re reading this, you have a different problem. You have all these tendencies, behaviors, norms, and hardwiring around rational thought. Those processes and practices expand to fill all available space which leaves precious little room for trying something new and different.

Peter Flatow is a long time innovation consultant and former senior marketing executive sums up the dilemma in six words:

Keep doing. Start doing. Stop doing. [Those are the six words] One of the reasons companies can’t innovate is because they don’t know what to stop doing. If they don’t stop doing things, they can’t start doing other things. If you want to become more innovative, you need to start by figuring out what you need to keep doing and what you need to stop doing. Only then can you innovate. And if you don’t innovate, you die.

If you’re a big company, you have another problem: Big weapons require big targets. If you have sales of USD$10 million, a 7% increase is $700,000. It’s like adding one new major customer. If you’re a $10 billion enterprise, a 7% increase is like adding an entire new company. Adding large amounts of revenue in a hurry isn’t where really discontinuous innovation shines.

Instead, innovation often takes you, at least at first, towards unknown opportunities where there is small if any guaranteed demand. One reason is because it’s safer that way. The other is that’s just the way it works with really edgy ideas. But you need growth, sales, revenues, and with that big base of yours, you need a lot of all three. An investment in innovation is an investment in tomorrow, and you need things to happen today.

So what do you do? Most people who study the topic agree that you have to purposefully create and protect opportunities for innovation. You have to find ways to spawn discontinuous thinking while shielding it—and the people involved with it—from the machinations of your organization.

When the innovation fails—and it almost certainly will at first—you need a way to keep your people involved and going, vs. demoralized and leaving.

Most importantly, when your innovation finally succeeds, you need to understand that the rest of your organization will ultimately try to kill it: Kill it outright through competition for the growing pile of resources success requires; kill it by trying to co-opt and absorb it like GM ultimately did to its extremely successful Saturn division.

There are examples of companies that do get it right, that are able to keep the wheels turning while still fostering innovation. Says Christensen:

They embedded projects to develop and commercial disruptive technologies within an organization whose customers needed them.

They placed projects to develop disruptive technologies in organizations small enough to get excited about small opportunities and small wins.

They planned to fail early and inexpensively in the search for the market for disruptive technology. They found that their markets generally coalesced through an iterative process of trial, learning, and trial again.

When commercializing disruptive technologies, they found or developed new markets that valued the attributes of the disruptive products, rather than search for a technological breakthrough so that the disruptive product could compete as a sustaining technology in mainstream markets. (pg. 99)

Here, the legacy of the dot.com era can potentially come back to bless us. Having participated in the tail end of it as a go-to-market consultant to a number of incubator companies, I had a ringside seat to both the good and the really ugly of the dot.com excitement. At literally the height of the boom, days before the wall started coming down, I wrote a kind of innovator’s credo that I called the disruptor’s dilemma, which had the following dimensions.

  1. Nothing is Known. If it really hasn’t been done before, there are few if any known market requirements, and therefore your planning and projections are pretty much guesswork.

  2. What Used To Work, Won’t.  The strategies and tactics that worked so well in the value system you just left probably won’t work in the market space you’re about to enter.

  3. Half of What You Decide Is Wrong.  As a result of the first two points, you have to make the assumption that at least half of the decisions you make are probably wrong.

  4. Half Of What You Learn Is Right.  You’ll spend every waking minute on a massive learning curve, and the feedback you’ll receive will usually be completely contradictory.  You should worry if that’s not the case.  The question is: where is the truth?

  5. All Of What’s Right Is Only Useful For Half As Long As It Used To Be.  Just because something is true, doesn’t mean it will continue to be true.

  6. Success Is Out There, It’s Just Somewhere Else.  If you keep learning, adapting, and innovating you might just succeed.  It’s just that success probably won’t lie where you thought it would.

Depending on your point of view, this is either a recitation of the worst of the dot.com hyperbole, or it is a reasonable set of guidelines for nurturing innovation. This led me to articulate what I then saw, and still see, as the “Six Laws of Successful Innovation,” which are as follows:

  1. Your plans won’t hold up so compress your planning.  Bring the right people to the problem; stress test your thinking, make clear decisions, keep your documentation simple, and launch decisively.

  2. Keep it simple. Complexity shows up all by itself.

  3. Once you launch, go fast and hard.  Compress your learning into small segments of time and space. Think in 100-day increments.

  4. Embrace your mistakes.  Mistakes are good because they tell you what not to do, so don’t cover them up. You’re probably going to make a bunch, so plan how you’re going to learn from your mistakes.

  5. Expect the unexpected. You’re going to whack some beehives in the process (particularly if you’re really innovating), and the bees are going to swarm.  Don’t expect the market to sit around and watch as you try to redefine reality. Expect pushback.  Expect to be counterattacked from unexpected directions. Expect partners to make silly decisions.  It should all tell you that you’re doing something right.

  6. You’re going to win in unexpected ways so build your organization, rewards structure, and partnership agreements accordingly.

 

Innovation is the Result of Conscious Choice

At an atomic level, innovation is an act of discovery or creation by one or more people. Sometimes the act of innovation has no precedent or explanation. It’s just EUREKA and there it is. One moment you’re cooking dinner, and the next moment you are drawing double helixes in your mashed potatoes. “Holy cow, I’ve just invented DNA,” or whatever.

More often innovation emerges from some sort of conscious process—even if the epiphany arrives unexpectedly and at some seemingly random time. For us non-genius types, that suggests we should break how we think about the problem or opportunity into discrete chunks and work them in some sort of organized fashion. So, to think, decide, and then act innovatively—some people call this actionable thought—requires that you do four things:

  1. Realize when and why you need to make a decision. Innovative thinking results from making a conscious choice: from inserting choice between the normal patterns of stimulus/response.

  2. Declare the decision. Decide what the decision is, how you’ll work it, and who should be involved. This is the first opportunity for innovative thinking: frame the problems and opportunities in divergent ways.

  3. Work the decision. Generate a complete set of alternatives, gather the information you need to understand the possibilities and probabilities, and ultimately make a choice that best fits your values. You can apply divergent, orthogonal, and otherwise innovative thinking to each of these dimensions.

  4. Commit resources and act.

Not everyone does those four things consistently or consistently well. My partners and I have worked with a lot of leaders and managers in some of the most widely regarded companies in the world and our observation is that most people don’t. In fact, the distribution generally looks something like this:

There are some really wretched decision makers and even worse at innovation. They are far more reactive than they are proactive. For them, a good or innovative outcome is usually a matter of luck.

There are a lot of people who are reasonably competent decision makers. They’re capable of working a decision. They’re not terrified of divergent thinking. Their decision processes aren’t great, but they’re not bad, and the outcomes they experience track accordingly.

There are a small group of people who understand how to work a decision in a high quality way. They embrace innovation, wild hares, crazy notions, and disruptive ideas. They understand uncertainty and gauge their expectations to match the level of innovation their choices embody.

There is a sprinkling of people we’d describe as innovative thinkers and great decision makers. Their gift is their ability to bring others along for the ride: to make it possible for the people around them to think and act creatively and to turn interesting ideas into high quality decisions and actions.

Innovative thinkers are proactive and decision oriented. They’re able to focus attention on what’s important and critical. They know how to break a problem or opportunity down into logical parts. They know how to work each of those parts for both innovation and quality. They know how to deal with possibilities and probabilities. They’re able to see opportunities where others see problems. They’re able to make choices, even amongst seemingly crazy alternatives and intractable uncertainty. They’re able to turn thought into action.

 

You Decide

There is innovation and clever thinking lurking all around your organization. You can prove it to yourself. Make a list of all the innovations your competitors have brought to market in the last five years. Take that list and start talking to people in your organization. I’d be willing to bet that someone in your organization came up with each of those ideas long before your competition brought them to market. It’s been true in every organization we’ve ever looked at, so chances are it’s true in yours.

So the difference isn’t in genetics, it’s in the processes and practices that in one case make it possible for innovation to fight to the surface, and in another, kill off divergent ideas like so much kudzu. That’s where leadership comes in.

  • Focus on creating the dynamics that support innovative thinking and high quality decision making. Choose your words carefully.

  • Examine your values to make sure they support innovation.

  • Make it safe for people to bring forward clever ideas.

  • Make resources available.

  • Find customers and opportunities to trial and learn.

  • Fail small.

  • Celebrate your failures and harvest your learnings. 

You can read more about decision making and innovation at www.decision-quality.com. You can also download an even longer version of this paper at that site.

 

 

 

 

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